SHANGHAI • For BMW, Tesla and other global automakers whose future is dependent on China's burgeoning market, any gains from lower import tariffs this week will likely be short-lived - thanks to United States President Donald Trump's trade war.
After decades of pleading for easier access to the world's biggest car market, manufacturers finally saw duties on overseas imports almost halved to 15 per cent on Sunday.
But the reprieve for producers of those models - if they are built in the US - is set to end soon, when a retaliatory 25 per cent levy makes them more expensive.
Mr Trump's tit-for-tat trade squabble with China threatens to undo years of lobbying by carmakers and drag Europe's leading luxury brands into the fray because of decisions that were made when global manufacturing and exporting were buzzwords.
Now, the uncertain implications of a tariff whiplash are unnerving dealers and consumers in a country where a record 24 million vehicles were sold last year.
"It is a nightmare to have the 25 per cent additional duty," said deputy general manager Wang Rongzhen of Yan'an Jinchi Feike Auto Sales and Service.
The Shaanxi-based dealership imports models such as Fiat Chrysler Automobiles NV's Jeep from the US.
At Shanghai Aote Hung Car Sales, higher tariffs would be another headache for sales manager Liu Yuanyuan, who is struggling to shift stock as consumers anticipate the typical summer clearance discounts.
Her dealership imports models including those from Mercedes-Benz, Buick and Jaguar Land Rover.
"Most of the clients are waiting," Ms Liu said.
"After the trade war issue, many imported vehicles like Mercedes-Benz or BMW, especially the BMW X4, X5 and X6 manufactured in US, are being impacted.
"We are advertising that clients can buy cars at promised prices before July 6, but there are no guarantees afterwards."
Unless President Trump backs down, on Friday, the US will impose tariffs on US$34 billion (S$46.5 billion) of Chinese imports, many of them parts used in products such as marine engines and power turbines.
China will impose countervailing levies on the same day, including on US-manufactured cars.
The auto tariffs will wipe out the July 1 reduction to 15 per cent from 25 per cent on all foreign car imports.
China's retaliatory tariffs could not have come at a worse time for foreign luxury-car makers.
The depreciating yuan is already making imported vehicles more expensive for local buyers.
Chinese equities have entered a bear market, further eroding domestic buying power.
"US carmakers may need to brace themselves for seeing their market share encroached as consumers increasingly favour domestic brands," said Professor Liu Yuanchun of the National Academy of Development and Strategy at Beijing-based Renmin University of China.
The additional levies could trigger even more retaliatory measures.
Mr Trump last month instructed trade officials to identify US$200 billion in Chinese imports for additional tariffs of 10 per cent, and said the US would impose duties on another US$200 billion if Beijing retaliates. China has vowed to hit back.
Of China's US$51 billion of vehicle imports last year, about US$13.5 billion came from North America, including sales of models made there by non-US manufacturers like BMW.
China imported 280,208 vehicles, or 10 per cent of total imported cars, from the US last year.
Some US automakers that pre-emptively lowered prices in China are now cornered.
A day after China announced cutting auto-import tariffs in May, Tesla lowered prices by about 6 per cent.
That means the Model S sedan would cost between 710,000 yuan (S$146,000) and 1.23 million yuan.